Tag Archives: Kampala

The incentive that among other things lured Uganda to choose the southern route is the tariff of $12.2 per barrel of oil that Uganda will pay to move its crude oil through Tanzania, which Ms Muloni says was “the best we got.”

Source: Oil & Gas Journal

The East African has learnt that in a bid to hijack the deal from Kenya, which also discovered oil in the northern region, Tanzanian officials were willing to throw sweeteners into the deal, which included free land and a fair tariff.

But, after getting the deal, Tanzanian officials started raising doubts over the project’s benefits to Dar es Salaam, citing a number of issues, such as the fact that in Tanzania land belongs to the government, so Uganda did not have to compensate any landowners, hence an increase in the tariff to a figure that The East African could not establish, was seen as a fair deal for Dar.

I hope Ugandan negotiators are aware that Tanzania’s bargaining position will get even stronger after the 1445km pipeline is built.

Uganda’s main advantages, for the moment, are cheap cotton and labour, and preferential access to American and European markets. When exporting to the rich world “Africa has an 18-35% duty advantage over any other continent”, says Nick Earlham, a shareholder in WUCC and in Fine Spinners. “It’s very competitive.”

Textile workers in Kampala earn about $85 a month, compared with $150 in Kenya and $108 in Vietnam, never mind up to $700 in China. But these savings are offset by problems in almost every other sphere. Power cuts keep plunging the factory into darkness, and an erratic supply of steam to the dyeing machines makes it hard to ensure that each batch of fabric looks alike.

Textiles appear to be a low hanging fruit as far as creating mass employment in African states is concerned. And, at least for now, they will remain immune from the threat of mechanization:

Robots are not yet much good at fiddly sewing jobs on floppy fabric; less than 0.1% of the world’s industrial robots are in the clothing trade.

Lastly, while production levels have not increased significantly over the last decade, FAO data (see below) do suggest a non-trivial increase in productivity (yield/ha) in Uganda’s cotton sector. This outcome could be a result of a myriad causes, but it is in line with recent research by Bates and Block (2013) showing increased agricultural productivity in African states that experienced real exposure to competitive electoral politics.

How do President Kiir’s children afford to live in such apparent luxury? Corporate records for Combined Holding Limited (CHL), a South Sudanese holding company incorporated in February 2016, provide one clue. These records reveal basic information about the company: the date of incorporation, names of shareholders, their contact information and a copy of their passport. One of CHL’s shareholders is a 12- year-old child with the surnames “Salva Kiir Mayardit” whose passport lists his occupation as “Son of President.” But, this hardly makes this child unique among members of President Kiir’s immediate family.

In total, The Sentry found that at least seven of President Kiir’s children have held stakes in a wide range of business ventures, especially in the extractive and financial sectors. Corporate filings obtained by The Sentry show that South Sudan’s first family appears to be active in the country’s oil and mining industries. Another document obtained by The Sentry, dated June 26, 2015, indicates that Thiik Kiir—the president’s 28-year-old son—owned 35 percent of Nile Link Petroleum. Adocument filed in 2014 lists Mayar Kiir—Thiik’s 29-year-old brother whose passport also confirms he is the president’s son—as owner of half of Oil Line & Hydrocarbons Limited, with the remaining shares held by three Kenyan businessmen.

A document dated May 25, 2015, lists Mayar Kiir as a 50 percent shareholder in Specialist Services Co. Ltd., a company that describes itself as being involved in “oilfield services and petroleum supply.” Another document indicates that Adut Salva Mayar, the president’s daughter, has owned shares of Rocky Mining Industries Limited. Yet another document reports that Anok Kiir, President Kiir’s 29- year-old daughter, has held a 45 percent stake in CPA Petroleum. And, according to another corporate record, Winnie Salva Kiir, the president’s 20-year-old daughter, held an 11 percent stake in Fortune Minerals & Construction. The same document indicates that, as of March 2016, the three largest shareholders of Fortune Minerals are Chinese investors.

You’d be interested to know that Salva Kiir and Riek Machar live only a short drive from each other in Nairobi, Kenya.

The idea that the leaders of South Sudan are stealing state resources left, right, and centre is totally abhorrent. Tens of thousands have died since the resumption of civil conflict. Millions are in dire need of humanitarian aid.

Which is why I think that it would be misguided to presume that the key problems with South Sudan are endemic corruption or the lack of “good governance.”

Should we really expect the president of a (struggling) oil producing 5-year old state to make $60,000 a year and not dip into state coffers once in a while? After all, Kiir’s *perceived* peers are likely not some low-level bureaucrats here in DC but other leaders of the world and the Davos crowd. This is not to say that if Kiir were paid more he would necessarily be less corrupt. The point is that I am not particularly shocked that Kiir and his collaborators in the pillaging of South Sudan want and have acquired the same material comforts that most leaders in the world have.

The historically inclined might even argue that this is South Sudan’s enclosure movement.

Perhaps one of the most important questions to ask about South Sudan is how the international community can help Kiir and his henchmen invest their (ill-gotten) wealth in Juba instead of Nairobi or Kampala.

If left alone, South Sudan will likely remain to be a runaway kleptocratic failed state instead of gradually moving towards a stable state with sufficient coercive powers.

The student of the political economy of institutions in me is somewhat convinced that horizontal intra-elite accountability is probably the best way out for South Sudan (if they can establish intra-elite political stability to begin with). The hope that vertical accountability through regular “free and fair” elections will help keep a globalized elite running a fractious post-conflict state honest and accountable is phantasmic. At the moment the domestic audience costs for engaging in corruption are very low for Kiir and other elites, and will likely stay that way for the foreseeable future.

And don’t even mention “political will.” There are no “good” leaders in the world. Just properly incentivized individuals.

This is from the Economist, on the state of the fight against HIV-AIDS.

The next UN target is that, by 2020, 90% of those infected should have been diagnosed and know their status, 90% of those so diagnosed should be on ARVs, and 90% of those on ARVs should have suppressed viral loads. That is ambitious, but history suggests those in the field will rise to the challenge.

The blue line is testament to George W. Bush’s No. 1 foreign policy success: PEPFAR.

On a different note, this is yet another data point to suggest that Yoweri Museveni has hit the inflection point, and from now on all his machinations to stay in power will wipe out the achievements of his first 20 years in power.

Uganda will take its oil to the market through Tanzania’s Tanga port, leaving Kenya to build its own pipeline to Lamu, if the positions taken at the just-ended talks in Kampala are maintained.

It turns out that Kenyan negotiators showed up without having done their homework. For example:

….. it has also emerged that the Kenyan officials participating in the Kampala talks may not have had all their facts right as they tried to address the concerns raised by Uganda over the northern route for the pipeline.

This is odd, given Amb. Amina Mohamed’s chops. Or should we be asking questions of the energy ministry?

Uganda’s decision should be treated as new information on the capacity of the Kenyan state to execute large scale infrastructure projects. Kenya really wanted this deal, and the fact that the negotiators could not seal the deal with Uganda suggests that there is no there there as far as Nairobi’s capacity to execute on LAPSSET is concerned. This will undoubtedly impact the Kenyatta administration’s ability to originate new projects related to the $25b LAPSSET development plan.

The economics of the choice of pipeline appeared to not have mattered:

A joint pipeline between Kenya and Uganda would have had an initial throughput of 300,000 barrels per day (200,000 barrels for Uganda and 100,000 barrels for Kenya). This could have earned the pipeline companies $1.66 billion a year, which would be shared between the countries according to throughput.

…… If the two countries go for a standalone pipeline, Uganda will lose $300 million every year due to an increase of $4.07 in tariff per barrel, and Kenya will lose $250 million per year due to the increased tariff of $6.96 per barrel.

All else equal, this is probably a net positive development for the future of the East African Community (EAC). It is obviously a big financial and political loss for Kenya (and for that matter, Uganda) but it will dampen the idea of a two-speed EAC — with Kenya, Uganda, and Rwanda in the fast lane and Tanzania and Burundi in the slow lane.

Kenya is competing with Tanzania to build the pipeline from oilfields in Hoima, western Uganda. It would either traverse northern Kenya’s desert to a proposed port at Lamu, near the border with Somalia, or south past Lake Victoria to Tanga on Tanzania’s coast. A third option would be through the southern Kenyan town of Nakuru.

Tanzanian President John Magufuli said earlier this month he’d agreed with Museveni to route the conduit via his country at a cost of about $4 billion, with funding from Total SA. The Kenyan option favored by Tullow, which has oil discoveries in Uganda and Kenya, may cost $5 billion, according to an estimate by Nagoya, Japan-based Toyota Tsusho Corp.

Uganda is in a rush to get its oil to market. It also wants to make sure that it does not tie its hands in an obsolescing bargain with Kenya. Being landlocked, the country already depends a great deal on Kenya as an overland route for its imports and exports. The pipeline would add to Nairobi’s bargaining power vis-a-vis Kampala.

It is not rocket science that routing both commercial traffic and oil through Kenya would give Nairobi near total influence on economic matters and would, added to Kenya’s already considerable market penetration in Uganda, leave little wiggle-room for unforeseen and some predictable hazards. The Ugandan domestic commercial and industrial community as well as consumers remember well how helpless they were when disruptions followed the Kenyan election of 2007 (even when some of us had urged the government earlier to restock fuel in anticipation of political violence). Many also live with the challenges of a single port to our import-addicted economy and the cost to family fortunes whenever Nairobi pulls bureaucratic red tape. Obviously being landlocked is not a “non-issue” as you framed it in Kyankwanzi. It needs to be placed in a detailed context. I have some reservations over your optimistic take on political and market integration, and that said, clearly having one member, in this case Kenya, within this greater EAC community with more power and influence than the rest is not an advantage to the growth of the community and may in fact prove rather dangerous. This as I recall has been the common fear cited in our neighbourhood about Uganda’s aggressive military spending (to which the Kenyan government responded with its own expenditure in the decade ending 2018).

The official reason given by Uganda for considering the Tanzania option (see map) is that construction of the Kenyan pipeline would be delayed (due to corruption, expensive land [Kenyans and land!], security threats from al-Shabaab, and the fact that the Lamu Port is yet to be completed).

All these are reasonable concerns.

Plus, it would have been foolish for Uganda not to strengthen its bargaining position by CREDIBLY demonstrating that it is considering BOTH options.

But Uganda must also know that whatever the outcome, this is an obsolescing bargain. Once the pipeline is constructed, it will be at the mercy of the host country government.

It is for this reason that it should seriously consider the kinds of future governments that might be in office in Nairobi and Dodoma/Dar es Salaam.

To this end Ugandan policymakers need to ask themselves the question: Would you rather deal with a government that partially answers to private sector interests and operates in a context of weak parties; or do you want to be at the mercy of a party-state in which some politically-motivated party stalwarts can actually influence official policy?

Understood this way, Uganda’s concern should be about what happens after the deal has been sealed; rather than the operational concerns that have thus far been raised by Kampala.

Notice that Kenya has been able to protect its existing oil pipeline well enough. Rioters may have uprooted the railway in 2007, but that was because they felt that Museveni was supporting their political opponent (Museveni could be more discreet in the future). Also, it is a lot harder to uproot a pipeline buried in the ground. The construction delays due to land issues can also be solved (and in Kenyan fashion, at whatever cost) — notice how fast Kenya is building the new standard gauge (SGR) railway line from Mombasa to Nairobi despite the well documented shenanigans around land compensation (More on this in a World Bank report I co-authored in my grad school days here).

Perhaps more importantly, the Kenyan option is attractive because Kenya also has oil, and will have to protect the pipeline anyway. This scenario also guarantees a private sector overlap between the two countries — in the form of Tullow or whoever buys its stake — that will be in a position to iron out any future misunderstandings.

Tanzania is also an attractive option. The pipeline will be $1 billion cheaper. Because it passes through largely uninhabited land, construction will be speedy. And the port at Tanga is a lot further from the Somalia border than Lamu, and should be easier to protect.

All this to say that the operational concerns raised by Kampala are a mere bargaining tool. These issues can be ironed out regardless of the host country. The big question is what happens AFTER the pipeline is constructed.

And here, I don’t see why Tanzania is necessarily a slam dunk.

The history of the EAC (see here for example) tells us that Kenya tends to subject its foreign policy to concentrated private interests. Tanzania on the other hand has a record of having a principled an ideologically driven (and sometimes nationalist) foreign policy with significant input from well-placed party officials. Put differently, the calculation of political risk in Kenya involves fewer structural veto players than in Tanzania. Ceteris paribus, it seems that it would be cheaper to manage the long-run political risk in Kenya than in Tanzania.

That said, the Tanzania option makes a lot of sense in a zero sum game. As Angelo puts it:

I have some reservations over your [Museveni’s] optimistic take on political and market integration, and that said, clearly having one member, in this case Kenya, within this greater EAC community with more power and influence than the rest is not an advantage to the growth of the community and may in fact prove rather dangerous.

But even this consideration only makes sense in the short run. Assuming all goes well for Tanzania, in the long run the country’s economy is on course to catch up to Kenya’s. Dodoma will then have sufficient political and economic muscle to push around land-locked Uganda if it ever so wishes.

To reiterate, the simple question Museveni should ask himself is: who would you rather negotiate with once the pipeline is built?

I don’t envy the Ugandan negotiators. And they have not helped themselves by publicly stating their eagerness to get their oil to market ASAP.

But we also know that dictators never want to simply win. They like to win with overwhelming landslides in order to demonstrate their super-popularity and to deter any future challengers (agents of the regime, like those running electoral management bodies, also have an incentive to inflate the dictator’s numbers as a show of loyalty — see here, for example).

Of the 28,010 voting stations, 130 of them had 100% voter turnout, 113 of which voted 90% or more for the eventual winner and incumbent, Yoweri Museveni (42,768 votes for him in these stations). 105 of these highly suspicious stations occurred in just 4 districts:

There are strong signs of ethnic violence. More than 300 people have been killed since President Pierre Nkurunziza successfully violated term limits to stay in office for a third term early this year. The ensuing violence has forced over 220,000 to flee the country, while scores remain displaced internally. Over the last week alone more than 80 people have been murdered in what is increasingly looking like a civil war rather than mere civil unrest met with heavy-handed repression. The African union has used the word “genocide” in reference to the Burundian situation.

The EAC is a five-member (Burundi, Kenya, Tanzania, Rwanda and Uganda) regional economic community (REC) that is arguably the most differentiated REC in Africa. Based in Arusha, Tanzania, it is a relatively robust institution replete with executive, legislative and judicial arms.

Like is the case for most African RECs, the EAC member states conceded precious little sovereignty to Arusha. For example, the EAC treaty does not directly empower the REC to intervene in a member country even in cases of gross violations of human rights (like is currently happening in Burundi). So far regional cooperation within the EAC has mainly focused on economic issues that do not pose substantial threats to sovereignty. It is for this reason that the EAC has avoided any kind of direct intervention in Burundi to end what is a singularly political crisis — both within Burundi and at the regional level.

That said, Article 123 of the EAC treaty provides a loophole for intervention.

The Article stipulates that the purpose of political cooperation among EAC member states is to, among other things: (i) strengthen the security of the Community and its Partner States in all ways; and (ii) preserve peace and strengthen international security among the Partner States and within the Community. In my view these clauses mandate the EAC to protect both the internal security of Burundi as well as intra-EAC security.

It is important to note that so far the norm has been to treat vagueness in African REC treaties as a call to inaction. But vagueness also provides willing interveners with a fair amount of latitude over interpretation. Furthermore, since 2000 the trend within African RECs has been to dilute the infamous OAU non-intervention clauses (see the AU treaty, for example) especially with regard to security matters.

It is not hard to see how the conflict in Burundi poses a clear and present danger to both Burundi’s internal security as well as peace and security within the EAC.

We know from history that an all out civil war in Burundi would threaten the security of the region. Burundi’s ethnic make up roughly mirrors that of Rwanda. Ethnic conflict in Burundi would inevitably elicit an intervention from Rwanda, thereby regionalizing the conflict (with an almost guaranteed knock on effect in eastern DRC). In addition, even though Kagame may not be a fan of Nkurunziza, he lacks the moral authority to criticize him given recent moves to scrap term limits in Rwanda.

If Rwanda (overtly) intervenes in Burundi, it is not clear which side Tanzania — a critical player — would take (especially because of the implications for the stability of eastern DRC). Kigali and Dodoma do not always see eye to eye. In addition, the new Tanzanian president, John Magufuli, is not particularly close to his Kenyan counterpart on account of his closeness to Kenyan opposition leader Raila Odinga. This may limit the possibility of collective action on Burundi by the EAC’s two leading powers.

And then there is Uganda. President Yoweri Museveni is currently the designated mediator in the Burundian negotiation process. But he is currently preoccupied in his bid to win an nth term in office (who’s counting?) His legitimacy as a mediator is seriously in question on account of his political record back home. Recall that the proximate cause of the current crisis in Burundi was Nkurunziza’s decision to violate term limits. Museveni scrapped term limits in 2005 and has systematically squeezed the Ugandan opposition into submission through heavy handed tactics that are direct violations of human rights.

Sadly for Burundians, the current state of inter-state relations within the EAC is strongly biased against any robust intervention to stop the violence that is increasingly becoming routine. Nkurunziza knows this, and will likely try to make an end run on his perceived political opponents before the wider international community begins to pay closer attention.

Lastly, the other possible interveners — the UN and the EU — are also not likely to intervene in Burundi any time soon, despite the country’s heavy dependence on foreign aid. Europe is hobbled by the ongoing refugee crisis and the war on ISIS. As for the UN, it increasingly launders its interventions through region or sub-regional IOs (see for example AMISOM in Somalia, under the AU). This kind of strategy requires a willing regional partner, something that is lacking in the case of the EAC (or the AU for that matter).

In the next few weeks there will probably be attempts at mediation and calls for a ceasefire. But my hunch is that things are likely to get much worse in Burundi in the short term.

Early Thursday morning militants from the al-Shabaab terror group stormed Garissa University College in Kenya and killed at least 147 students. The second worst terror attack in Kenya’s history lasted 13 hours and was made excruciatingly horrific by the fact that many of the victims remained in communication with their loved ones until the very last moments. Unbearable images of young students laying dead in their own pools of blood in classrooms will forever be etched in Kenyans’ memories. The attack echoed the September 21, 2013 Westgate Mall terror attack that killed 67 people. After Westgate many Somalia analysts insisted that such daring missions were the kicks of a dying horse, and cited successes by AMISOM and AFRICOM in taking back territory from al-Shabaab and decapitating the organization through drone strikes against it leadership.

Following Garissa, it might be time to reconsider this persistent narrative and overall Somalia policy in the Eastern African region. Here are my thoughts:

1. Regional powers do not want a powerful central government in Mogadishu: Since independence several governments in Somalia have espoused a dream of re-uniting all the Somali lands and peoples in eastern Africa (under “Greater Somalia,” see map). That includes parts of Ethiopia, Kenya, Djibouti, and more recently the breakaway regions of Somaliland and Puntland. A strong central government in Mogadishu would most certainly revive this old irredentist dream, despite the fact that the irredentist dreams of Somalia’s pre-Barre governments and the costly wars with Ethiopia (and proxy wars with Kenya as well thereafter) were the beginning of the end of stability in Somalia. Nairobi and Addis are acutely aware of this and that is part of the reason Kenya has for years maintained a policy of creating an autonomous buffer region in southern Somalia – Jubaland. The problem, however, is that a weak Mogadishu also means diffused coercive capacity and inability to fight off breakaway clans, militias, and terror groups like al-Shabaab.

What kind of settlement does Kenya (and Ethiopia) want to see in Somalia? (See above). What does the West want? What do Somalis want? Are these goals compatible in the long run?

3. The internationalization of the al-Shabaab menace is a problem: Western assistance in fighting al-Shabaab and stabilizing Somalia is obviously a good thing. But it should never have come at the cost of unnecessary internationalization of the conflict. Al-Shabaab has been able to get extra-Somalia assistance partly because it fashions itself as part of the global jihad against the kafir West and their African allies. Internationalization of the conflict has also allowed it to come up with an ideology that has enabled it to somehow overcome Somalia’s infamous clannish fractionalization (although elements of this still persist within the organization). Localizing the conflict would dent the group’s global appeal while at the same time providing opportunities for local solutions, including a non-military settlement. AMISOM and the West cannot simply bomb the group out of existence.

4. Kenya is the weakest link in the fight against al-Shabaab: Of the three key countries engaged in Somalia (Ethiopia, Kenya, Uganda), Kenya is the least militarized. It is also, perhaps, the least disciplined. According to the UN, Kenyan troops are engaging in illegal activities that are filling the coffers of al-Shabaab militants (charcoal worth at least $250 million was shipped out of Somalia in the last two years). Back home, Nairobi has allowed its Somalia policy to be captured by a section of Somali elites that have other agendas at variance with overall national policy. The Kenya Defense Force (KDF) risks becoming a mere pawn in the clannish struggles that straddle the Kenya-Somalia border. It is high time Nairobi reconsidered its Somalia policy with a view of decoupling it from the sectional fights in Northeastern Province. The first step should be to make the border with Somalia real by fixing customs and border patrol agencies; and by reining in sections of Somali elites who continue to engage in costly fights at the expense of ordinary wananchi. The government should adopt a strict policy of not taking sides in these fights, and strictly enforce this policy at the County level.

5. Kenya will continue to be the weakest link in the fight against al-Shabaab: Of the countries in Somalia Kenya is the only democracy with a government that is nominally accountable to its population and an armed force with a civilian leadership. This means that:

(i) Generals can run rings around State House and its securocrats: Unlike their counterparts in Uganda and Ethiopia, the Kenyan generals do not have incentives to internalize the costs of the war in Somalia. The cost is mostly borne by the civilian leadership. They are therefore likely to suggest policies that primarily benefit the institution of the military, which at times may not be in the best interest of the nation. And the civilian leadership, lacking expertise in military affairs, is likely to defer to the men in uniform. The result is makaa-sukari and other glaring failures.

(ii) Kenyan internal security policies are subject to politicization: With every al-Shabaab attack (so far more than 360 people have been killed) Kenyans have wondered why Ethiopia, which is also in Somalia and has a large Somali population, has remained relatively safe. My guess is that Ethiopia has done better in thwarting attacks because it has a coherent domestic security policy backed by unchecked coercion and surveillance of potential points of al-Shabaab entry among its Somali population.

Now, Kenya should not emulate Ethiopia’s heavy-handed tactics. Instead, focus should be on an honest assessment of how internal security policies in Mandera, Garissa, Wajir, Kwale, Kilifi, Mombasa, Nairobi, and elsewhere are playing into the hands of al-Shabaab. What is the best way to secure the “front-line” counties that border Somalia? What is the role of local leaders in ensuring that local cleavages and conflicts are not exploited by al-Shabaab? How should the security sector (Police and KDF) be reformed to align its goals with the national interest? What is the overarching goal of the KDF in Somalia and how long will it take to achieve that goal? How is the government counteracting domestic radicalization and recruitment of young Kenyan men and women by al-Shabaab?

These questions do not have easy answers. But Kenyans must try. The reflexive use of curfews and emergency laws, and the blunt collective victimization of communities suspected to be al-Shabaab sympathizers will not work.

I do not envy President Uhuru Kenyatta: Withdrawing from Somalia will not secure the homeland. Staying the course will likely not yield desired results given the rot in KDF and the internal politics of northeastern Kenya. Reforming the police and overall security apparatus comes with enormous political costs. A recent shake up of security chiefs and rumors of an impending cabinet reshuffle are signs that Kenyatta has realized the enormity of the insecurity situation in the country (and overall government ineffectiveness due to corruption). But will Kenyans be patient and give him the benefit of the doubt? Will the president be able to channel his laudable nationalist instincts in galvanizing the nation in the face of seemingly insurmountable security threats and ever more corrupt government officials?

Meanwhile 2017 is approaching fast, and if the situation doesn’t change Mr. Kenyatta might not be able to shrug off the title of “Goodluck Jonathan of the East.”

For the sake of Kenyan lives and the Jamuhuri, nakutakia kila la heri Bwana Rais.

BARCELONA (Reuters) - Spain mounted a sweeping anti-terror operation on Friday after a suspected Islamist militant drove a van into crowds in Barcelona, killing 13 people before fleeing, in what police suspect was one of multiple planned attacks.

WASHINGTON (Reuters) - The United States and Japan will step up their defense cooperation to deal with the threat from nuclear-armed North Korea as tensions in East Asia remain high, officials from the two allies said on Thursday.

CARACAS (Reuters) - Venezuela will hunt down and jail leaders of violent protests that have rocked the country since April, its new top prosecutor said on Thursday, a day before a hate crimes law was expected to be approved despite fears that it will be used to crush dissent.